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| Financial Services |
Financial
Services offered by HSIIDC
The scope of financial
services provided by HSIIDC has been enlarged over the years keeping in view the
ever-growing needs of industrial sector. The services now being provided include:
- General Term Loan
- Equipment Finance Scheme (EFS)
- Working Capital Term Loan (WCTL)
- Loan under TUF Scheme
- Line of credit Scheme (LOC)
- Scheme for Financing Commercial Complexes
- Scheme for Corporate Loans
- Scheme for Take-Over of loans of other institutions/banks
Who
is Eligible?
Only Corporate entities having manufacturing set up or intending to set up
one in the State of Haryana are eligible for availing financial assistance from HSIIDC.
Policies and Procedures relating to General Term Loan
The policies and procedures relating to various services offered by the
Finance Division of the Corporation are discussed hereinafter.
TERM LENDING
What can be financed ?
The unit should envisage setting up manufacturing
facilities in the State of Haryana. The service sector entities like Hotels, Hospitals,
Warehousing etc. are also considered eligible for financing.
General Term Loan
Maximum exposure per company : Rs. 2500.00 lakh (to a single company under
all schemes) irrespective of size of project
Minimum Security Margin : 25%
Promoters Contribution : 30%
Debt Equity Ratio: 1.5:1
Note:
The acceptability level of Debt Equity Ratio depends on
the risk perception in each case. Also, for the purpose of Debt Equity Ratio, the equity
will consist of share capital, free reserves, preference share capital redeemable after
ten years and interest-free unsecured loans from promoters/directors etc which are not to
be withdrawn during the currency of the loan.
| Repayment Period |
5 to 8 years depending on the repayment
capacity with initial moratorium of 1-2 years on repayment of the principle amount. . |
Rate of interest
The rate of interest applicable (floating) as on date is 12% with
rebate of 1% on timely payment for general term loan. However, for specific scheme, the
interest rate have been indicated under the respective heads of specific schemes
SERVICE TAX & PROCESSING CHARGE ON TERM LOAN
Processing Fee : 0.20% of the loan amount
The processing fee for term loan cases of more than Rs.5.00 Crores,
the applicants can deposit 50% of the processing fee at the time of submission of
application and balance 50% of the processing fee is required to be deposited before issue
of sanction letter
Service Tax
: 12.00% of the processing fee and Education Cess on Service Tax is
3.00%.
After the case has been accepted and appraisal initiated,
the processing charges are not refundable. However, if the application is withdrawn after
the acceptance of case but before starting the appraisal, the processing charges are
refundable after retaining service tax & lump-sum fee of Rs. 5000/-.
COLLATERAL SECURITY
The Term Loans extended by the Corporation are secured by way of mortgage
of primary security. However, the Collateral Security is obtained to further secure the
loan and its quantum depend on the risk preception.
VERIFICATION AND VALUATION OF COLLATERAL SECURITY: --
The corporation has a panel of valuers for carrying out verification
and valuation of collateral security. Further it is to be cross checked by the officers of
the Corporation. Following information will be required from the client:
- Sale deed/Conveyance deed of the proposed collateral security;
- Valuation report from an approved valuer;
- Search report from an Advocate; and
- Approved building plan in case of constructed property.
HOW TO GO ABOUT AVAILING FINANCIAL ASSISTANCE?
Interaction with the 'Client' starts with the receipt of Application Form
(both printed and on floppy) which is available on payment of Rs.100/- at Head Office and/
or Branch Offices of the Corporation.
The applicants may downloads the application form from the website
which is available under download section on homepage. However, the applicants are
required to pay demand draft of Rs.100/- in favour of HSIIDC Ltd. payable at
Panchkula/Chandigarh at the time of submission of application along with processing fee
Following basic information is required at this stage:
- Processing charges & Service tax in the name of HSIIDC
Limited;
- Certificate of Incorporation of the company along with a
copy of Memorandum and Articles of Association;
- Background of Promoters including details of their assets
and liabilities;
- In case of existing units, background of the unit,
financial statements for the last three years;
- Financial statements of sister units for the last three
years;
- Details of existing assistance availed outstanding, default
etc.;
- Brief particulars of the proposed project including project
cost and means of finance;
- Details of existing and proposed capacity;
- Location where project is proposed to be set up with
complete details of land along with copies of letter of allotment/ sale deed/ conveyance
deed;
- Details of proposed building along with site and building
plan;
- Main machinery with details of suppliers. In case of
second-hand machinery, the justification for such option, residual life of the machinery,
year of its make/ manufacture, cost of similar new machinery etc.;
- Availability of raw material, its sources, price behavior
etc.;
- Requirement of power, steam, water, pollution control;
- Technical tie up, if any;
- Marketing tie up, if any; and
- Copies of other Govt. approvals like permission from
Pollution Control Board, SSI/SIA approval, permission for change of land use, approval for
power load sanction etc. (However, these approvals can also be submitted at the time of
appraisal)
The Application Form, duly filled in along with a copy on floppy and
complete with above information, may be submitted at Head Office or any Branch Office of
the Corporation. The Application Form may also be submitted at
Business Meets organised by the Corporation from time to time.
ACCEPTANCE OF PROPOSAL FOR APPRAISAL
After receipt of application, the proposal is placed
before the Screening Committee, which consists of senior officers of the Corporation. The
promoters are also required to be present in this meeting. The objective of this meeting
is to interact with the promoters and also to examine as to whether the proposal can be
accepted for detailed appraisal. This stage takes about a weeks time.
ACCEPTANCE OF PROPOSAL FOR APPRAISAL DURING BUSINESS MEET
The Corporation organises Business Meets at different
locations throughout the year. The event is generally notified through press in advance.
Basic information as per the prescribed format is required for scrutiny of proposals
during the Business Meets. The proposals accepted at Business Meets are straightway
allotted for appraisal after approval of the Managing Director.
DETAILED APPRAISAL OF THE PROPOSAL
After a proposal is accepted for appraisal, the detailed
appraisal is carried out by the officer(s) of the Corporation to assess the technical
feasibility and financial viability of the proposal. Among other things, the Appraising
Officer(s) focus on the following points:
- Background of promoters, relevant
experience, their resource position;
- Performance of the unit, if
existing;
- Performance of sister units;
- Suitability and adequacy of land,
location etc.;
- Adequacy of proposed building;
- Suitability and adequacy of
proposed machinery;
- Background and reputation of the
machinery suppliers;
- In case of second hand machinery,
year of manufacture, residual life, cost of similar new machinery;
- Sources and availability of raw
material, price data for the last 1- 2 years;
- Adequacy of utilities like water,
steam, skilled manpower etc.
- Technical /Financial tie-ups;
- Adequacy of equipments for
pollution control;
- Opinion of the banker on the
promoters and conduct with them; and
- Marketing tie-ups, market
overview with emphasis on demand and supply, other existing players, extent of competition
and emerging competition, product price etc.
After the appraisal, the proposal is placed before the
Advisory Committee which consists of members from within the organisation as well as
outside experts. This Committee looks into various aspects of the appraised project, and
its strengths & weaknesses to assess and determine the technical feasibility and
financial viability of the proposal.
SANCTION OF LOAN
Once the proposal is cleared by the Advisory Committee, it is placed
before the authority competent to sanction the loan.
The time taken from the receipt of application till sanction of loan is
about two months subject to expeditious and timely receipt of complete information from
the applicant.
DISBURSEMENT OF SANCTIONED ASSISTANCE
The process of disbursement of term loan starts with the
acceptance of terms & conditions of sanction by the borrower as conveyed in the
Sanction Letter and deposit of Imprest Money and Up-front Fee. The imprest Money is kept
as an advance and its objective is to meet the expenses the Corporation may have to incur
during Monitoring and Follow-up. Presently, the Imprest money is charged @ Rs. 25000/- in
loan cases up to Rs. 150 Lakh and Rs. 35000 in loan cases above Rs. 150 lakh. The
objective of charging Up-front Fee is to meet the commitment cost of funds during
disbursement stage. The rates at which up-front fee is charged are: @ 0.5% of the loan
amount. Other requirements for first disbursement are as under: 
Legal Documentation: Legal Documentation precedes
any disbursement. The details of Legal Documents required to be executed is supplied
immediately after sanction. However, legal documents/resolutions required before
disbursement are briefly explained hereunder:
- Resolutions
General body resolutions under section 293(1)(a) to
mortgage the assets of the company and under section 293(1)(d) regarding borrowing powers.
Board resolutions to approve loan application to HSIIDC,
to accept terms and conditions of loan and authorising Directors to sign loan agreement,
hypothecation deed, to open special current account , resolution to execute Tripartite
Agreement with other joint lenders for creating pari-passu charge on fixed assets of the
company, if applicable, and other documents under the common seal of the company.
ii Other documents
- Letter of acceptance duly signed by the Director as per BOD resolution.
- Up-to-date certified copy of the Memorandum & Articles of Association.
- Particulars of immovable property with copies of Mutation, Jambandi, sale-deed, search
report etc. both in respect of Company's property as well as collateral security.
- Site plan (Aks-shajra) on tracing cloth indicating the total area and surroundings on
all sides.
- Statement of share capital certified by the Statutory Auditors.
- Copy of the latest audited Balance Sheet.
- Copy of the Returns of allotment filed with the Registrar of Companies.
- Copy of the Resolutions filed and registered with the Registrar of Companies under
section 192 of the Companies Act.
- Search report by Statutory Auditor regarding charges filed with the Registrar of
Companies.
- Full particulars of guarantors alongwith details of immovable & movable assets,
PAN/GIR No. and two passport size photographs .
- No objection certificate under section 281 of the Income Tax Act for creation of charge.
- Permission for conversion of land usage , if applicable, from the competent authority.
- Details of shareholding of guarantors i.e. number of shares, Folio No., Certificate
Nos., Distinctive Nos.
- No lien letter from the bank in respect of special current account.
Details of stamp papers (Non Judicial) for various documents (
to be purchased from Haryana only).
- Stamp paper for Rs. 5.00 in the name of company for loan agreement.
- Stamp paper for Rs. 5.00 in the name of company for undertaking.
- Stamp paper for Rs. 5.00(three Nos) in the joint name of all
promoters/directors/guarantors for undertaking.
- Stamp paper for Rs.20.00 in the name of company for Tripertite agreement , if
applicable.
- Stamp paper for Rs.20.00 in the name of company for power of attorney.
- Stamp paper for Rs. 5.00 in the name of company for letter of undertaking.
- Stamp paper for Rs.20.00 in the name of company for hypothecation deed.
- Stamp paper for Rs.10.00 in the name of authorised Director/Managing Director (with co's
name) authorised to create mortgage for declaration & undertaking.
- Stamp paper for Rs.15.00 in the joint name of all guarantors for guarantee bond.
- Stamp paper for Rs.10.00 in the name of owner of collateral security for declaration and
undertaking.
Note: The loanee units
may bring the Common Seal & the Letter Heads of the company at the time of execution
of loan documents. The execution of legal documents is done at Head office of the
Corporation.
- Other Requirements:
- Form 8 is required to be filed with the Registrar of Companies immediately after
execution of legal documents and proof of filing to be furnished to the Corporation
together with original receipt issued by Registrar of Companies.
- Deposit of imprest money which is Rs. 25000/- for loan up to Rs 150.00 lakh, Rs 35000
for loans above Rs. 150 Lakh.
- Deposit of upfront fee @ 0.5% of loan amount
- Compliance with the terms of sanction;
- Certificate from Statutory Auditors of the company, indicating the investments made
under different heads and sources of funds, as per the prescribed format.
- Physical verification by the officer(s) of the Corporation of the security created and
verification of books of accounts, bank statements and copies of bills etc.;
- In case of change in machinery suppliers/ specifications, the following is required:
- reasons for change of supplier/ specifications;
- quotations of machinery along with catalogue and details of customers to whom new
suppliers have supplied similar machinery.
- Valuation and verification of collateral security by the Officer of the
Corporation;
- Insurance cover note for the insurance of assets created, the name of the Corporation
should be endorsed in the issueance cover note; and
- Details of suppliers in whose favour the disbursement is to be released.
- For subsequent disbursements, the steps under legal documentation are not to be repeated
except charge registration, if pending and insurance of assets.
- The disbursement of loan is linked to the extent of promoters' contribution raised and
security created at site as per scheme. The extent of disbursement is restricted to lower
of amount worked out on the basis of promoters' contribution raised and security created.
- The applicant company is required to submit progress report during implementation of the
project in prescribed format .

LOAN
UNDER EQUIPMENT FINANCE SCHEME (EFS)
Eligibility Criteria
The financial assistance under this scheme is available to
the existing profit-making companies for acquiring machinery & equipment for
expansion/ modernisation/ balancing. The company should satisfy the following eligibility
norms to be covered under the scheme.
- The unit should be in operation for last four years and
should be in profits and/ or declared dividend in the preceding two financial years;
- The current ratio should preferably be 1.33:1 or above;
- The cost of proposed equipment normally should not be more
than 50% of the existing gross block;
- The applicant company should not be in default with the
Institutions/ Banks; and
- The proposed equipment should be separately identifiable
Financing Parameters
| Maximum assistance |
Rs.500 lacs per proposal |
| Repayment period |
2 to 5 years |
| Rate of interest |
11% p.a. floating |
Processing
Fee |
0.20% of loan amount |
| Upfront fee |
0.50% of loan amount |
Service Tax & Processing
Charges
Procedure is same as applicable under General term loan
Penalties:
In case of any default, the rate of interest applicable to
general term loan is chargeable for the balance loan amount and it becomes the documented
rate of interest for all intents and purposes. In addition, penal interest is charged @ 3%
p.a. over and above this revised documented rate on the defaulted amount for the period of
default.
HOW TO GO ABOUT AVAILING FINANCIAL
ASSISTANCE UNDER THIS SCHEME
The Applicant is required to submit Application on the
prescribed proforma which is available without any payment at Head Office and Branch
Offices of the Corporation. The Application, along with processing charges & Service
tax may be submitted at Head Office or Branch Office or in the Business Meets, which are
organised from time to time along with the following information:
- Balance sheets for the last 4 years;
- Details of proposed equipments;
- Justification for the proposed equipments and likely
benefits of the scheme;
- Details of existing borrowings with repayment schedule;
- Profitability Projections for the next five years;
ACCEPTANCE OF APPLICATION
The proposal is analysed with main focus on past
performance of the unit and the advantages the proposed equipment will provide in its
operations. It is accepted for appraisal immediately if it fulfills the basic parameters
laid down in the scheme.
APPRAISAL
A quick appraisal is carried out with special emphasis on
the following points:
- Performance of the unit;
- Credit record with other institutions;
- Justification for the proposed equipment;
- Incremental benefits of the scheme;
- Overall viability of the scheme.
VERIFICATION AND VALUATION OF COLLATERAL
SECURITY
Procedure is same as under General Term Loan.
SANCTION
A decision with regard to sanction of loan is taken by the
Managing Director on the recommendations of the Advisory Committee. The entire
process takes about one month after receipt of requisite information.
DISBURSEMENT OF SANCTIONED ASSISTANCE
The process of disbursement of EFS loan starts with the
acceptance of terms & conditions of sanction by the borrower as conveyed in the
Sanction Letter and deposit of Imprest Money and Up-front Fee. The objective of Imprest
Money and Up-front Fee has been explained earlier under the General Term Loan Scheme.
Other requirements are given as under:
Legal Documentation:
The details of Legal Documents required to be executed is
supplied immediately after sanction. However, legal documents/ resolutions required before
disbursement are briefly explained hereunder:
- Resolutions
General
body resolutions under section 293(1)(a) to mortgage the assets of the company and under
section 293(1)(d) regarding borrowing powers.
Board resolutions to approve loan application to HSIIDC,
to accept terms and conditions of loan and authorising the Director(s) to sign loan
agreement, hypothecation deed, creation of equitable mortgage, to open special current
account, for creation of charge on fixed assets of the company and other documents under
the common seal of the company.
- Other documents
As detailed under the General Term Loan.
- Details of stamp papers (Non-Judicial) for various
documents ( to be purchased from Haryana only).
- Stamp paper for Rs. 5.00 in the name of company for loan
agreement.
- Stamp paper for Rs. 5.00 in the name of company for
undertaking for meeting shortfall in promoters contribution.
- Stamp paper for Rs. 5.00(three Nos) in the joint name of
all promoters/ directors/ guarantors for undertaking.
- Stamp paper for Rs.20.00 in the name of company for
hypothecation deed.
- Stamp paper for Rs.15.00 in the joint name of all
guarantors for guarantee bond.
- Stamp paper for Rs.10.00 in the name of owner of collateral
security for declaration and undertaking.
In case of creation/ extention of charge on
existing fixed assets of the Company, the following stamp papers are required.
- Stamp paper for Rs.10.00 in the name of authorised
Director/Managing Director (with cos name) authorised to create mortgage for
declaration & undertaking.
- Stamp paper for Rs.20.00 in the name of company for power
of attorney.
- Stamp paper for Rs. 5.00 in the name of company for letter
of undertaking.
Forms 8 is required to be filed with the
Registrar of Companies immediately after execution of legal documents and proof of
filing to be furnished to the Corporation together with original receipt issued by
Registrar of Companies.
- Other requirements:
- Deposit of imprest money which is Rs 25000/- for loan up to
Rs 150.00 lakh, Rs 35000 for loans above Rs. 150 Lakh
- Deposit of Up-front fee @ 0.5% of loan amount.
- Compliance with the terms of sanction;
- Certificate from the Statutory Auditors of the company
indicating the investments made under different heads and sources of funds as per the
prescribed format.
- Physical verification of assets and checking of books of
accounts and invoices/bills by the officers of the Corporation;
- Valuation and verification of collateral security, if any;
- Insurance of assets already created;
- Details of suppliers in whose favour disbursement is to be
released.
For subsequent disbursements, the steps under legal
documentation are not repeated except for charge registration, if pending and insurance of
assets.
The disbursement of loan is linked to the extent of
promoters contribution raised and security created at site as per scheme. The extent
of disbursement is restricted to lower of amount worked out on the basis of
promoters contribution raised and security created.
Letter of Credit
The Corporation has made arrangements with some Commercial
banks for opening Letter of Credits for the purchase of machinery from India or abroad
against term loan. This scheme aims at reducing the efforts of the client to approach the
bank to open the Letter of Credit, which is a de-novo process, after the sanction of loan
from HSIIDC.
Margin
Minimum 15% against disbursement eligibility and 25% on
the balance amount of Letter of Credit. However, the Corporation ensures tie-up of total
funds required for retiring the Letter of Credit.
Service Charges
The Corporation levies service charges which are shared
with the Commercial Banks through whom the Letter of Credit is opened. The HSIIDCs
charges are comparable with those of the Commercial Banks in case the Letter of Credit is
directly opened through them. The details of charges are as under:
| Letter of Credit up
to Rs 100.00 lac |
1% of the amount of
Letter of Credit |
| Letter of Credit
above Rs 100.00 lac |
@ Double the FEDAI*
rates |
*stands for Foreign
Exchange Dealers Association of India, which is a Confederation of Foreign Exchange
Dealers for deciding various charges on services provided by the members.
PROCEDURE FOR OPENING OF LETTER OF CREDIT
Following information is required for opening the Letter
of Credit:
- Request letters for opening/issuing the Letter of
Credit;
- Proforma invoice for the machinery for which Letter of
Credit is to be opened;
- Copy of Import/Export Code number;
- Form A-1 in duplicate, duly filled in;
- Letter of Credit application form on stamp paper of
Rs.5/-;
- Bond of guarantee from all guarantors on stamp paper of
Rs.15/-; and
- Undertaking that the imported machinery is covered under
Open General License (OGL).
Where the amount of Letter of Credit is not covered by the
eligibility of disbursement, following additional information is required:
- the sources of retiring the Letter of Credit;
- indemnity bond on stamp paper of Rs.20/-;
- undertaking to pay higher rate of interest on the imported
equipment, as per guidelines of the RBI

Letter
of Comfort
The Corporation also issues Letter of Comfort in favour of Commercial
Banks to facilitate opening of the Letter of Credit by the latter, in case the client so
wishes. Since it amounts to commitment of funds by the Corporation, service charges @ 0.5%
of the amount of Letter of Comfort are charged. The Letter of Comfort is issued on the
request of the client and the amount is restricted to the extent of disbursement
eligibility.

Working
Capital Term Loan
As the very title suggests, the loan under this category is provided for
meeting the working capital requirements including shortfall in margin money for working
capital. It is a medium term maturity loan.
Eligibility : Only those units which have been sanctioned/ disbursed term loan by the
Corporation.
Limit for Loan:
| SSI |
Rs. 125.00 lakh |
| Non SSI |
Rs.200.00 lakh |
Financing Parameters
| Repayment period |
5-1/2 years including six months moratorium |
Maximum assistance (SSI)
(Non SSI) |
Rs.125 lacs
Rs.200 lacs |
| Rate of Interest |
12.00% p.a. floating (applicable both for
SSI/Non-SSI units)
(before 1% timely payment rebate) |
| Processing fee |
0.20% of loan amount |
| Upfront fee |
0.50% of loan amount |
COLLATERAL SECURITY :
| 1) |
Where security margin on
fixed assets against loans secured by charges on such fixed assets including WCTL is less
than 50% |
Collateral security equal
to 100% of the WCTL in the form of fixed assetts preferably situated in Haryana as well as
extension of charge on the existing fixed assets. |
| 2) |
Where security margin on
fixed assets against loans secured by charges on such fixed assets including WCTL is more
than 50% |
Extension of charge on
existing fixed assets of the company as weel as collateral security upto 30% of the WCTL
considering merits of each case. |
HOW TO GO ABOUT AVAILING FINANCIAL ASSISTANCE UNDER WORKING CAPITAL
TERM LOAN
The Client is required to submit an Application on the
letter-head of the company along with Processing Charges & Service tax. The
Application may be submitted at Head Office or Branch office or in the Business Meets,
which are organized from time to time, along with following information:
- Balance sheets of the company for the last 3 years;
- Copy of the CMA data;
- Details of working capital limits sanctioned/availed from
the Bank and credit reports;
- Details of collateral security being offered along with
valuation thereof;
- Undertaking that the funds shall be used only for the
working capital purposes.
After receipt of proposal, the case is placed before the
BPC for acceptance for appraisal. Constitution of the BPC has been discussed earlier. The
proposals accepted in the Business Meets chaired by MD/HSIIDC are not subject to
ratification by BPC.
APPRAISAL OF THE PROPOSAL
A brief appraisal is carried, which is aimed at the following points:
- Justification for the working capital;
- Analysis of the performance of the unit;
- Credit record with other Institutions/Banks;
- Overall viability of the scheme.
VERIFICATION AND VALUATION OF COLLATERAL SECURITY
Procedure is same as under General Term Loan.
DISBURSEMENT OF THE SANCTIONED ASSISTANCE
The process of disbursement of loan starts with the
acceptance of terms & conditions of sanction by the borrower as conveyed in the
Sanction Letter and deposit of imprest money and Up-front Fee. The objective of Imprest
Money and Up-front Fee has been explained earlier. Other requirements are as under:
- Legal Documentation : The details of Legal Documents required to be executed is supplied
immediately after sanction. However, legal documents/ resolutions required before
disbursement are briefly explained hereunder:
- Resolutions
As
discussed under General Term Loan
- Other documents
As discussed under General Term Loan
- Details of stamp papers (Non-judicial) for various
documents ( to be purchased from Haryana only)
- Stamp paper for Rs. 5.00 in the name of company for loan
agreement.
- Stamp paper for Rs. 5.00 in the name of company for
undertaking.
- Stamp paper for Rs.15.00 in the joint name of all
guarantors for guarantee bond.
- Stamp paper for Rs.10.00 in the name of owner of collateral
security for declaration and undertaking.
In case of creation/ extention of charge on
existing fixed assets of the Company, the following stamp papers are required.
- Stamp paper for Rs.10.00 in the name of authorised
Director/Managing Director (with cos name) authorised to create mortgage and
for declaration & undertaking.
- Stamp paper for Rs.20.00 in the name of company for power
of attorney.
- Stamp paper for Rs. 5.00 in the name of company for letter
of undertaking.
b. Other requirements:
Forms 8 is required to be filed with the Registrar of
Companies immediately after execution of legal documents and proof of filing to be
furnished to the Corporation together with original receipt issued by Registrar of
Companies.
- Deposit of imprest money which is Rs 25000/- for loan up to
Rs 150.00 lac;
- Deposit of Up-front fee @ 0.5% of loan amount
- Compliance with the terms of sanction;
- Valuation and verification of collateral security, if any;
- Insurance of assets already created/morgaged for the said
loan;
For subsequent disbursements, the steps under legal
documentation are not repeated except for charge registration, if pending.

Line
of Credit Scheme
Under this scheme, a Line of Credit, valid for one year is granted to
existing borrowers who have created first charge on its fixed assets in favour of the
Corporation, for purchase of separately identifiable machinery/ equipments obviating
appraisal procedure and giving flexibility in identifying the machinery/ equipments at a
later stage.
Eligibility Conditions:
The unit shall be in operation at least for four
years and earned net profit for the last two years.
The borrower should not be in default to
institutions/banks and should be in Standard Assets category.
Existing current ratio should not be less than
1:1.
Average cash accruals during the last two years
should be sufficient to service the existing & proposed loan.
Under this scheme, nominal processing fee of Rs.
5000/- is charged against processing fee of 0.20% under other term loan schemes.
Financing Parameters:
| Minimum promoters' contribution |
25% |
Maximum over all debt equity for the company including LOC ratio |
1.5:1 |
| Cost of additional equipments |
Not more than 50% of existing net block of unit. |
| Repayment period |
5-1/2 Years including moratorium period 6 months. |
Rate of Interest (Non SSI units )
(SSI units) |
11% p.a. floating |
| Upfront fee |
0.50% p.a. of loan amount. |
Minimum net worth and cash accruals
|
Amount of line of credit |
Minimum net worth- Rs. 5 crore
Minimum cash accruals - Rs. 100 lacs |
Rs. 250 lacs |
Minimum networth- Rs. 4 crore
Minimum cash accruals Rs. 75 lacs |
Rs. 200 lacs |
Minimum networth Rs. 3 crore
Minimum cash accruals Rs. 50 lacs |
Rs. 150 lacs
|
Disbursement
of Sanctioned Assistance:
Procedure is same as under Equipment Finance Scheme.

Scheme
for Corporate Loan:
The corporation has recently
introduced a scheme of corporate loan under which assistance of Rs. 500 lacs is granted
which can be utilised within six months from date of sanction for:
- Expansion / modernization / balancing equipment / technology tie ups
fees alongwith meeting of working capital requirements, if any.
- Takeover of loans of other institutions coupled with additional
assistance, if any. However, the assistance shall not cover new projects.
- Meeting the expenses relating to general corporate needs of
unforeseen nature such as VRS/Bonus/IT payments etc.
Eligibility Criteria:
- The unit, situated in Haryana should be carrying out commercial
operations for more than last five years.
- The company should be making profits for the last three years.
- Minimum networth and cash accruals of the company as per the last
audited balance sheet should be Rs. 5 crore and Rs. 1 crore respectively (the revaluation
reserves shall not be considered towards networth).
- The company should not be in default of principal/interest to
banks/financial institutions and its account should have been classified as `Standard
Asset by its lenders.
- Current ratio of the company as per last audited balance sheet should
not be less than 1:1.
- Interest coverage ratio of the company as per last audited balance
sheet should not be less than 2:1.
- Companies not assisted by HSIIDC but otherwise meeting all the
eligibility criteria would also be considered.
Financing Parameters:
| Repayment period |
3-1/2 to 5-1/2 years with initial moratorium period of 6-12 months |
| Promoter's contribution |
Minimum 30% |
| Debt Equity Ratio |
1.5:1 (including proposed loan) |
| Rate of interest |
As applicable to normal term loans. |
| Processing and up front fee |
As applicable in normal term loans cases. |
Security:
- Demand promissory note.
- Extension of first charge on fixed assets of the company with asset coverage ratio
(including proposed loan and fixed assets) of not less than 1.5 times.
- Exclusive charge on fixed assets to be acquired under Corporate Loan Scheme.
- Security margin not below 25%.
- Personal guarantee of promoters.
DISBURSEMENT OF SANCTIONED ASSISTANCE :
Procedure is same as under General Term Loan.
Scheme For Financing Commercial Complexes
Sensing the needs of borrowers, HSIIDC has
introduced a Scheme for construction of Commercial complexes. The assistance under the
scheme is provided for:
- Acquisition of land and construction of building thereon.
- Interior decoration, air conditioning, communication facilities for commercial complexes
and shopping malls.
- Acquisition of racks for storage, weigh bridges, conveyor system, lift for show rooms,
departmental stores, sales outlets etc. Products for sale will not be considered for
financing.
- In case of existing functional commercial complexes, renovation cost and cost of
acquisition of additional establishment could also be considered for financial assistance.
- Any other required facilities connected with the commercial complexes, can also be
considered for financing.
The land should be in name of company or its
promoter and same be mortgaged with the Corporation.
Financing Parameters
Maximum assistance |
Rs. 2500 lacs. |
| Minimum promoters contribution |
30% |
| Maximum debt equity ratio |
1:1 |
| Minimum Security Margin |
35% |
| Processing Fee |
0.20% of loan amount |
| Upfront fee |
0.50% of loan amount |
| Repayment Period |
upto 8 years with moratorium period of 18 months |
| Rate of Interest |
13% p.a floating (Before 1% timely payment rebate) |
Scheme for take over of loans
of other Institutioins/ banks
The Corporation
has a scheme for take over of loans of other Institutions / Banks, along sanctioning
of loan for expansion/modernization schemes of such companies. This will facilitate
dealings of the company with one institution, improve the asset quality of the
Corporation, while reducing the cost of funds for the borrowers.
The scheme shall be subject to following
parameters:-
- All the parameters of general loan scheme such as Debt Equity Ratio, loan limit shall be
applicable for this scheme also. The assets coverage ratio for the loan being taken over
should not be less than 1.5 times.
- The unit should be in existence and profits at least for the last one years.
The unit should be regular with the institutions/banks from where it
has availed financial assistance and the account should have been classified as
standard assets.
The collateral security as may have been given to other
institution/banks shall be obtained.
The entire loan should be taken over and loan thus taken over shall
be secured by way of first charge on fixed assets of the company .
The payment should be directly released in favour of
institution/banks which has extended the financial assistance.
However, this take-over of loans will not be in
isolation and shall be resorted to only when company has scheme for additional loan for
expansion/ modernisation.

Technology upgradation Fund Scheme for Textile Industry (TUFS)
The Ministry of textile, Govt. of India has announced Technology
Up-gradation Fund Scheme for technology up-gradation & modernization in the Textile
and Jute Industries to be operative for five years from April 1, 1999. Under the scheme
five percentage point on the interest rate actually charged by the identified financial
institutions shall be reimbursed on the sanctioned projects.
Scheme for Financing Industrial Infrastructure Industrial Estates
developed by HSIIDC & HUDA
Purpose:
Assistance to be provided under the scheme
for the following:
- Acquisition/Purchase of land and construction of building
thereon.
- Lifts, Interior decoration, air conditioning, Fire fighting
equipments, communication facilities etc. required for the building.
- In case of existing buildings, renovation cost and cost of
acquisition of additional establishment could also be considered.
- Any other required facilities connected with the
infrastructure projects.
Eligibility:
The land for such infrastructure project should be in name of
company or its promoter and falling with in the HSIIDC/HUDA area and the same be mortgaged
with the Corporation.
The company/concern shall obtain NOC from estate Division of the
concerned agency to the effect that the unit is otherwise eligible for leasing as per
EMP-2005 and there is no default of the conditions of the allotment.
The company/concern shall undertake that as and when the premises are
given on lease, the lease agreement would be drafted to the satisfaction of the
Corporation.
The company/concern will open an Escrow account with its bankers
whereby the repayment of instalments due to the Corporation will automatically be credited
to the Corporations account on due dates.
The company/concern shall undertake that the lease agreement would
also specifically mention that the unit being leased out stands mortgaged to the
Corporation.
Financing Parameters
| Maximum assistance |
Rs. 1500 lacs enhanced to
Rs.2500 lacs. |
| Minimum promoters
contribution |
30% |
| Maximum debt equity ratio |
1:5:1 |
| Minimum Security Margin |
35% |
| Processing Fee |
0.20% of loan amount |
| Upfront fee |
0.50% of loan amount |
| Repayment Period |
Up to 8 years with moratorium
period of 18 months |
| Rate of Interest |
13% p.a floating (Before 1%
timely payment rebate) |
Monitoring and Follow up:
Once financial assistance is extended to any client, sharing of
information relating to the project is important. The Corporation has a system to
follow-up the progress of the case at all stages. Following information, which may be
useful to both lender and the borrower, is required to be submitted :
DURING IMPLEMENTATION OF THE PROJECT
Quarterly progress reports of the project are required in the prescribed
format.
After Implementation of the Project the client is required to
comply with the following:
- Annual renewal of Insurance cover of the assets;
- Submission of half yearly reports (quarterly reports in case
of listed Companies) indicating actual performance vis-a-vis projections in prescribed
format;
- Submission of audited annual accounts;
- Physical verification of the assets by the officer(s) of the
Corporation at least twice in a year;
- Balance confirmation as on 31st March of every year, till the
assistance is fully repaid.
- Intimation of change in Directors/promoters, if any
- Annual statement of net worth of guarantors
- Conduct quarterly Board meetings in the presence of Nominee
Director

Recoveries:
The Corporation's capability to serve its clients in the best possible
manner is dependent upon timely recoveries of its advances to the borrowers. The clients
should be aware that their loan accounts are classified in three categories as per the
guidelines issued by the RBI. These categories are:-
- Standard Assets
- Sub-standard Assets
- Doubtful Assets
The classification of loan account in any of the above categories and
provisioning in lieu thereof is to be done by the Corporation in accordance with the
guidelines issued by the RBI from time to time. However, the clients must understand that
while the provisions are just nominal in case of standard assets, these keeps on going up
with the loan accounts becoming sub-standard and doubtful assets in line with the aging of
default as well as realisable security cover available to the Corporation towards
repayment of interest and principal amounts. It is, therefore, crucial both for the
Corporation as well as the client to ensure that his account does not become a
non-performing asset (NPA) and remains in the Standard Asset category.
RECOVERY SCHEDULE
The repayment of principal and interest thereon is
required to be made in quarterly installments falling due on 30th April, 31st
July, 31st Oct. and 31st January in a financial year (these dates
may be different in old cases). The rationale behind recovering the due amount on a
quarterly basis lies in the Corporations liability to service the loans/ refinance it
avails from banks/ refinancing institutions for its clients.
The repayment schedule of installments is worked out on
the basis of tenure of the loan at the time of first disbursement. However, there are also
cases where a client may not need to avail some portion of the sanctioned loan and he may
be in a position to complete his project without really needing the balance unutilised
assistance. In such cases, the client will be allowed the benefit of re-fixation of his
installments only once in accordance with the amount of loan actually disbursed and the
tenure of the loan subject to his furnishing an undertaking that the balance unutilised
component of the loan be cancelled. However, in all such cases, the amount paid by them
towards initial installments till the date he makes such request will not be recalculated
for re-fixing the installment schedule. In other words, while revising the repayment
installment amount, retrospective benefit will not be admissible.
ACCOUNTS
Normally, the client is supposed to know the amount of installment falling
due on a particular date as per the repayment schedule fixed at the time of first
disbursement or re-fixed subsequently and he is expected to adhere to the repayment
schedule. However, for the convenience of the client, the Corporation also has a system
whereby the client would be served with a Demand Notice just before repayment of the
installment amount falls due. Similarly, he would also be receiving his account statement
after realisation of the credit of the payment made by him. However, the client may please
note that any failure on the part of the Corporation to send such a Demand Notice would
not provide him with the plea that he could not make the payment as he had not received
such Demand Notice. The account statement is sent on a regular basis.
TIMELY CREDIT TO HSIIDC's ACCOUNT
The borrowers may please note that the repayment to HSIIDC is taken into
account on the day the amount gets credited to the HSIIDC's account and not on the day he
issues a cheque/ draft payable towards such repayment. Hence, the clients would be well
advised to send their drafts/ cheques well in time if they want to avail of the interest
rebate or save on penal interest for the period of delay involved in realisation of the
amount to the HSIIDC's account. The borrowers are also advised that they must issue the
cheque/ draft/ pay order payable at the station where it is sent for realisation i.e.
branch office or head office, whatever the case may be.
REBATE & PENALTIES
- Rebate:- The Corporation has a scheme to allow interest rebate which is linked with the
timely repayments of interest and principal. The rebate presently being allowed is 1% on
interest rate and the benefit of this is extended in the fourth quarter, after watching
the regularity of payment of interest and principal for three quarters. The scheme of
interest rebate is subject to review from time to time. While the interest rebate may be
lowered at some point of time, it may as well be discontinued altogether at some time.
- Penalties:- The objective of penal interest is to act as a deterrent for default and
encourage timely payments. In case of default, penal interest @ 3% p.a. over and above the
documented rate is charged on the defaulted amount for the period of default.
OTHER STRINGENT RECOVERY MEASURES
In cases of consistent and deliberate defaults, and where the Corporation
has failed to effect its recoveries after exhausting all persuasive methods, the
Corporation is competent to proceed under Section 29 of the SFCs Act and resort to
coercive action there under. It may be clarified here that invoking SFCs Act for the
recoveries is done as a matter of last resort but let the borrowers also note that the
assets of the company can be taken over under the provisions of this Act and disposed off
for recovery of its dues.

Pre-payment
of Term Loan or Any Other type of Financial Assistance:
Generally, pre-payment of loans is discouraged. This is because the
refinancing institutions from whom HSIIDC raises resources also do not accept
pre-payments. Moreover, it upsets the financing plans of the Corporation besides resulting
in higher costs very often. Wherever the Corporation agrees to accept pre-payment of loan,
the premium equivalent to the net present value (NPV) of differential in rate of interest
for the un-expired period discounted at prevailing rate of interest is charged. However,
acceptance of pre-payment is at the sole discretion of the Corporation.

Generally, rescheduling of loans is discouraged and not allowed unless
there are genuine and compelling reasons. Wherever it is agreed in principle, the request
of the borrower must be supported with the following documents:
- Financial statements for the last two years and current year;
- Projections for the remaining period of loan;
- Reasons for seeking rescheduling; and
- Proposal for rescheduling.
Rate of Interest in case of Re-scheduling
- First Re-scheduling: Documented rate or the rate prevailing at the time of
acceptance of the rescheduling proposal, whichever is higher.
- Second Re-scheduling: 1% above the documented rate or 1% above the rate
prevailing at the time of rescheduling, whichever is higher, on the rescheduled amount for
the period of rescheduling.
- Re-scheduling beyond currency period: 0.5% above the rate of interest applicable
for the respective rescheduling(s) within the existing currency period for the loan as
mentioned above, for the extended period.

One Time Settlement (OTS) Policy of HSIIDC
One time settlement will be done in all loan ( term loan/ working capital
term loan/ bridge loan ) cases which are categorised either Doubtful/loss on the terms and
conditions detailed hereunder:-
- Wilful defaulters as detailed subsequently shall not be entertained under these
guidelines for the settlement of loan account.
- The categories of loan accounts under the guidelines are defined as under and basis of
status of loan account would be taken on the date as and when the party approaches for
settlement of loan account.
DEFINITION OF DOUBTFUL ACCOUNT AS PER THIS POLICY:-
Doubtful loan account is one, where the principal remained overdue for a
period exceeding two years.
|
Category |
Benefits Permissible |
1.(a) |
Doubtful loan account
(Category-A) |
Accounts may be settled by waiving off entire penal interest plus 25%
of component of compounded interest. However, the waiver shall not exceed 25% of total
outstanding. |
|
Where the loan account has
remained doubtful for less than three years. |
(b) |
Doubtful Loan Account
(Category-B) |
Accounts may be settled by waiving off entire penal interest plus 50% of component of
compounded interest but waiver should not be more than 50% of total outstanding. |
|
Where the loan account has
remained doubtful for more than three years but less than five years. |
(c) |
Doubtful Loan Account
(Category-C) |
Accounts
may be settled by waiving of entire penal plus 100% component of compounded interest |
| a |
Where the loan account has
remained doubtful for more than five years. |
| b |
However, the amount
recoverable shall not be less than 90% of realisable value of primary and collateral
security available with the Corporation in all the above categories. The assessment shall
not be more than six months old on the date of submission of settlement proposal. |
| (d) |
Doubtful/Loss Loan
Account (Category-D) |
Accounts may be settled by waiving of
entire penal plus 100% component of compounded interest and 50% of
simple interest. However, the waiver should not exceed the interest outstanding. |
| Under this category, those cases will fall where
the primary and collateral securities have already been disposed off by the Corporation.
There will be no verification of assets and the eligibility under the scheme will not be
linked with personal assets of borrowers/guarantors. |
|
The amount of waiver under the scheme shall be
restricted to the amount payable by the party and would be applicable to cagegory 'A',
'B', 'C' and 'D' of the One Time Settlement Scheme only. |
| II. |
Units in possession of the Corporation for over
three years but could not be disposed off inspite of four attempts and no other security
is available. |
Accounts may be settled by charging principal and
misc. alongwith normal refinance rate or equivalent thereto prevailing at the time of loan
advance. |
| III |
- Where the units have been affected by the natural calamities such as fire, floor, riots,
strikes and are lying closed and the borrower is interested to adjust their account.
- Where the primary security has been disposed off but the collateral security is
available and he borrower is interested to adjust the account without disposal off
collateral security irrespective of its assessed value.
- Where the unit is lying closed for one year or more and the party wants to adjust its
loan account.
|
The units falling in either of the three
categories approaches for settlement, the accounts may be settled by allowing the benefit
of waiver of penal interest provided the entire outstanding is liquidated within a period
of six months from the date of settlement. Such benefit, is however, to be restricted to
the extent of interest outstanding and no portion of principal amount shall be waived off. |
| IV |
LOSS PORTFOLIO/ R.C./R.C. STAYED CASES |
|
- Where the primary security and collateral security stands disposed off by the
Corporation.
- Those cases may be considered for settlement where the Revenue Authorities have declared
the means of the borrowers and guarantors in the case as irrecoverable and have furnished
certificate/statement related to the same.
|
Principal plus misc. and 1/3rd of the
simple interest in terms of Mortgage Deed on the amount outstanding to the recovered and
no verification of personal assets may be insisted upon. An affidavit about the present
means of the promoters is to be given by promoters/guarantors. |
| 1 |
Non-Applicability of OTS to
Wilful defaulters.
As per the guidelines of the RBI the following cases will fall under
the definition of wilful defaulters:-
- Deliberate non-payment of the dues despite adequate cash flow and good networth.
- Siphoning off of funds to the detriment of the defaulting unit.
- Assets financed have either not been purchased or have been sold and proceeds have been
misutilised.
- Misrepresentation/falsification of records.
- Disposal/removal of securities without bank's knowledge.
- Fraudulent transactions by the borrowers.
The RBI guidelines further state that the identification of the wilful
defaulters should be made keeping in view the track record of the borrowers and should not
be decided on the basis of isolated transactions/incidents. The default to be categorised
as wilful must be intentional deliberate and calculate. |
| 2 |
The financial statements/working results may be
thoroughly scrutinized and the borrower company/unit will be considered as wilful
defaulter if it has sufficient cash accruals and the interest has been charged to its
profit & loss account but has not been paid inspite of cash profits. |
NOTES AND EXPLANATION.
- Borrowers interested to avail off the benefit under the scheme may apply to the
concerned Branch Manager/ Head Office.
- Calculations of amount payable by the borrowers under the guidelines may be done by
adjusting/appropriating the amount received from the borrowers, amount of sale proceeds of
unit and collateral/additional security first towards misc. expenses, then interest and
thereafter principal amount. Further, in those cases where securities mortgaged to the
Corporation are still in existence, the realisable value of the assets of the unit and
collateral/additional security available with the Corporation should be given.
The case is to be processed after receipt as upfront advance of :-
- 5% of outstanding in normal cases
- 10% of outstanding in possession taken cases;
- 15% of outstanding in possession taken cases where the company wants the possession to
be restored immediately
- The amount deposited and will be kept in Sundry Deposit Account and credited to the
party's account when the account is finally adjusted as per terms.
All proposals would be scrutinized by a committee comprising of the
following:-
- Executive Director, Chairman;
- General Manager (Disbursement & Recovery);
- General Manager (Appraisal)
- Addl.G.M. (Disbursement & Recovery)
- DGM (Disbursement & Recovery)
- DGM (Appraisal)
The committee will give recommendations which would be placed before the
BoD for approval.
- Prevailing normal rate of interest from time to time would be charged after expiry of
currency of loan.
- Maximum permissible repayment period of the OTS amount will be two years in cases where
HSIIDC is the lead institution. However in cases where HFC is the lead institution,
repayment period will be restricted to one year. 25% of the total amount worked out would
be payable within 3 months & the balance 75%amount in equal quarterly instalments over
the repayment period as may be approved and the OTS amount so worked out would carry
prevailing normal rate of interest w.e.f. the cut off date on which the OTS amount is
worked out.
- In no case principal and misc. expenses amount shall be waived off under these
guidelines.
- The relief shall be worked out from the date of last default persisting as per Mortgage
Deed by recasting the account as per documented rate of interest.
- The power to grant extension in the payment of settlement amount and condonation of
delay subject to payment of interest by the parties for the intervening period shall rest
with the Managing Director.
- The benefit under the guidelines will be passed on only after receipt of full amount as
per settlement.
1. SHORT TITLE AND COMMENCEMENT:
This policy may be called " HSIIDC OTS
Scheme - 2007."
2. CATEGORIES OF ACCOUNTS TO WHICH THIS POLICY APPLY
This policy will cover all
the accounts of the borrowers/defaulters of HSIIDC which were classified as NPA accounts
which have become doubtful or loss as on 31.3.2004. The policy would also cover NPAs
classified as Sub-standard as on 31.3.2004 which have subsequently become doubtful or loss
assets.
For the purpose of
determining eligibility, the NPA definition would be as per the guidelines of RBI
applicable upto the year ending March 31, 2004. Accordingly, NPA means non performing
asset account if interest and/or instalment of principal remain overdue for more than 6
months. All accounts where the age of default in instalment of principal and/or interest
is more than 6 months, the account would be treated as NPA which could be either a
sub-standard/doubtful/loss account in terms of classification guidelines of RBI as
prevailing on 31.3.2004, which is as under:
| CATEGORY |
AGE OF DEFAULT |
| Standard |
0-6 months |
| Sub-Standard |
More than 6 months upto 24 months |
| Doubtful |
More than 24 months |
| Loss |
No security available. |
Likewise NPA definition for
leasing accounts would be as per RBI guidelines as applicable for year ending 31.3.2004.
This policy will be applicable to all NPA
accounts irrespective of outstanding balance.
The policy would also cover cases
pertaining to bridge loans/loan availed against state Subsidy, lease assistance, working
capital terms loans, bridge loan against working capital & corporate loans.
The policy will also cover all accounts
where the Corporation has taken action under section 29 of SFCs Act, RC issued cases
and also cases pending before Courts/DRT/BIFR. However, in the cases which are pending
before the Courts/DRT/BIFR, the borrower shall be required to give an affidavit for
withdrawal of the case or obtain consent decree from Court(s)/DRT/BIFR.
The policy would also cover cases where
the Corporation had approved settlement under any of the ongoing schemes of the
Corporation known as One Time Settlement Scheme(OTS)/under RBI policy as adopted by HSIIDC
in 2003 provided the OTS has not fructified and either the OTS has been withdrawn by
HSIIDC or the validity period of the OTS has expired. However, cases where OTS is in
force, under any earlier policy, will not be eligible to be covered under this scheme.
The policy would also cover cases where
orders for winding up have been passed and the official liquidator appointed and also the
cases where BIFR has recommended for winding up of the company.
This policy shall not be applicable to
willful defaulters as per RBI guidelines which are detailed hereunder:-
- Deliberate non-payment of the dues despite adequate cash flow and good
networth.
- Siphoning off of funds to the detriment of the defaulting unit.
- Assets financed have either not been purchased or have been sold and
proceeds have been mis-utilized.
- Misrepresentation/falsification of record.
- Disposal/removal of securities without banks/HSIIDC's
knowledge.
- Fraudulent transactions by the borrowers.
The RBI guidelines further
state that the identification of the willful defaulters should be made keeping in view the
track record of the borrowers and should not be decided on the basis of isolated
transactions/incidents. The default to be categorized as willful must be intentional,
deliberate and calculated.
3. SETTLEMENT FORMULA amount and cut off date
- NPAs classified as Doubtful or Loss as on March 31, 2004
The minimum amount that should be recovered under
the policy in respect of compromise settlement of NPAs classified as doubtful or loss as
on March 31, 2004 would be 100% of the outstanding balance in the account as on the date
on which the account was categorized as doubtful NPA.
- NPAs classified as sub-standard as on March 31, 2004 which became
doubtful or loss subsequently.
The minimum amount that should be recovered in respect
of NPAs classified as sub-standard as on March 31, 2004 which became doubtful or loss
subsequently would be 100% of amount outstanding as on the date on which the account was
categorized as doubtful NPA plus interest at 12% p.a.(floating) from the cut-off date till
the date of final payment.
- Lease Finance Cases
- In lease finance cases, the minimum amount recoverable shall be based on
the date on which the account became doubtful or the date on which the assets of the unit
were taken over/repossessed by the Corporation, whichever is earlier. The amount shall be
the principal outstanding as on the cut off date as per the capital recovery method plus
the actual expenses incurred by the Corporation recoverable from the party upto the date
of settlement. The Corporation must restrict the watch and ward as well as other expenses
to the extent of interest (prevailing rate) on the principal amount from the date, the
amount became doubtful till the date of settlement.
- Further, in those cases of lease finance where the borrowers were given
advances to procure machinery, but the machinery was not procured due to mis-utilization
of funds and in such cases the date of default may be the date on which the amount was
advanced to the party and the corresponding cut off date for the purpose of calculation of
settlement amount may be taken two years after the date of disbursement.
- In all lease finance cases, the residual value may be recovered without
interest. This amount shall, however, be over and above the settlement approved, if any.
In cases where the lease accounts are settled under OTS
policy, the sale consideration will be 0.50% of the principal amount as per capital
recovery method incorporated in OTS amount under OTS policy plus taxes, thereon.
- The prevailing guidelines in respect of appropriation of recovery amount
according to which any amount received from the borrower is appropriated first towards
miscellaneous expenses then towards interest and then towards principal shall not be made
applicable in lease finance cases.
- The term "outstanding balance" shall mean the total recoverable
from the borrower as on the cut off date as per documented terms.
- The term "cut off date" with reference to an account means the
date on which the account was last categorized as doubtful account and has continuously
remained either as such or as a combination of doubtful and loss account since that date.
- The settlement amount as above would be the minimum acceptable amount.
However, HSIIDC could negotiate with the borrower to recover more than this amount keeping
in view factors like security and disposability of the assets.
4. PAYMENT TERMS
- At the time of making application under this policy the borrowers will be
required to deposit amount equal to 10% of principal outstanding in the account as on
31.03.2006 as up-front. The company shall have option to pay the full OTS amount without
any interest within 60 days from the date of issue of letter.
Alternatively, an amount equal to 25% of the settlement amount shall be payable
within one month from the date of approval of settlement by the Corporation, (10% of the
amount deposited along with the application shall be adjusted against this demand). The
balance 75 percent of the settlement amount shall be paid within one year from the date of
approval of settlement by the Corporation in 11 equal monthly installments together with
interest @ 12% p.a.(floating) from the date of settlement upto the date of final payment.
Interest on the settlement amount shall be required to be paid in 4 quarterly
installments.
- Any amount received from the eligible defaulting borrower after the cut
off date will be adjusted towards the crystallized settlement amount provided that in no
case the settlement amount shall be less than principal plus miscellaneous expenses
outstanding.
- Payment terms (Leasing Cases) :- At the time of making application under
this policy the borrowers will be required to deposit amount equal to 10% of principal as
per Capital Recovery Method as on cut off date as up front. The modalities for balance
payment in case of leasing cases will remain the same as in term loan cases.
5. SANCTIONING AUTHORITY
The Sub-committee
constituted by the Board for approving OTS in dis-investment cases shall also be the
competent authority to take decision on the Compromise Settlement of Chronic
Non-Performing Assets as per the provisions of this policy. A quarterly report in respect
of cases where OTS has been done will be placed before the BOD for information. In case
OTS is done outside the provisions of this policy, the matter shall be placed before the
Board of Directors for decision.
6. EFFECT OF THIS POLICY ON CRIMINAL LIABILITIES
The settlement under this policy shall be without
prejudice to any criminal liability that may arise due to any competent
enquiry/investigation.
7. DEVIATION/RELAXATIONS ONLY BY BOARD
The Board of Directors shall be competent authority to
grant any relaxation in this policy on case to case basis.
8. INTERPRETATION OF THE PROVISIONS OF POLICY
If any question arises
relating to the interpretation of any of the provision of this policy, it shall be
referred to the Board of Directors of the Corporation for decision and the decision of the
Board of Directors of the Corporation shall be final.
- In the event, any of these conditions are not fructified, the benefit of
this scheme will be forfeited and the money received under this scheme shall be considered
as if the same was received in the normal course under the account.
- The Corporation shall have a final right to accept or reject any
settlement proposal made under this policy with or without assigning any reasons.
The Scheme will remain open upto 31.12.2007
for receipt of applications from borrowers.
PRE-CONDITIONS FOR ISSUE OF SECOND/SUBSEQUENT CHARGE
The Second and Subsequent Charges are generally required by the
clients in favour of Commercial Banks against their working capital limits. The Client is
required to comply with the following:
- Request letter indicating the purpose of the charge;
- The unit should not be in default with the Corporation;
- Where the charge is required in favour of the bank for working capital, a reciprocal
consent of the bank ceding second charge against current assets in favour of HSIIDC is
required;
- Copy of the sanction letter of the Bank;
- For the purpose of second charge on fixed assets in favour of the Bank and creating
second charge on current assets in favour of HSIIDC, a tripartite agreement involving the
company, the HSIIDC and the concerned Bank is executed.
H ISSUE
OF NO-DUES CERTIFICATE AND RELEASE OF SECURITY DOCUMENTS: --
For issuing of 'No Due Certificate', all the dues of the Corporation
should have been paid.
For release of security documents, there should not be any outstanding
dues of the Corporation and also the 'No Due Certificate' from the Institutions in whose
favour the pari-passu charge/ second / third or subsequent charge has been issued, should
be submitted.

SCHEME FOR EXTENSION
IN CURRENCY IN LOAN ACCOUNTS FOR 5 YEARS.
- Eligibility Criterion:
- Only NPA accounts, as on 31.3.2006, shall be covered under the scheme
& and also all restructured A/c's as on 31.3.06.
- The validity of the scheme shall be upto 31.12.2006.
- The Scheme will be applicable even in those cases where the currency
already stands expired.
- The accounts should have run for minimum three years.
- Scheme:
- The entire penal interest shall be waived.
- The penal interest be waived from the date of last continuous default
and the same should be restricted to the interest outstanding as on date, in no case the
principal amount be waived.
- The party will pay 25% as down payment of defaulted amount after
excluding penal interest.
- The balance 75% of defaulted amount shall be paid in five years in
quarterly installments.
- The defaulted overdue amount may be treated as a "loan against
overdue" at the present rate of interest including rebate as per policy.
- Security:
- In cases where the value of primary/collateral securities is equivalent to the loan
outstanding after waiver of penal interest and down payment of 25% of defaulted amount, no
collateral security will be insisted upon. However, in cases where there is a gap between
the outstanding and the value of primary/collateral securities, the company will give
collateral security equivalent to the gap.
In case the borrower does not remain/become regular at the expiry of one
year, then benefit so given shall be withdrawn.
Units
available for sale
To recover its dues, Corporation takes over the assets mortgagged to
it u/s 29 of SFC's Act/Court/AAIFR/BIFR and sell them on 'As is Where is' basis. For
information of interested parties the list of such units is given below:
Public
Deposit Scheme
"No More Public Deposits Accepted by HSIIDC"
HSIIDC |